Audit issue clouds Odyssey Charter School renewal
Odyssey Charter School’s charter renewal was approved last month – as long as it fulfills all requirements of its probation.
But questions about the school’s finances linger, even after an audit required as part of its probation was completed. Contributor Larry Nagengast explains why.
Although the Odyssey Charter School has been granted a five-year renewal of its charter by state Secretary of Education Susan Bunting, questions concerning more than $250,000 in spending must be resolved by June 30 for the school to successfully complete a probationary period ordered by Bunting last July.
Odyssey, a Greek-themed school in suburban Wilmington with some 1,800 students in kindergarten through high school, was placed on probation in July after the Department of Education’s Charter School Accountability Committee (CSAC) found spending of more than $93,000 and board policies and procedures that were inconsistent with the language in the school’s charter. The terms of the probation require Odyssey to recover the funds that were improperly spent, make changes to its bylaws and the composition of its board of directors and to change policies to make the school’s management more transparent.
The current uncertainty centers on the findings of an audit of Odyssey spending commissioned by state Auditor Kathy McGuiness to examine Odyssey financial records from 2017 to 2019 that CSAC selected for review. In a 15-page report, auditors from the Santora CPA Group identified more 140 payments, totaling more than $250,000, for which Odyssey could not provide documentation. Those items were reported in lists that include the vendor’s name, the transaction date and amount and account coding information. The report, however, made no judgment as to whether the expenses identified were appropriate.
"We were expecting some kind of interpretation of whether [Odyssey] did something wrong or if they did everything right." - Chuck Longfellow,Department of Education administrator/CSAC chair.
Under the terms of its probation, Odyssey is supposed to pay the cost of the audit. The contract with Santora capped the fee for the engagement at $25,000. McGuiness’s office said Santora has submitted a bill but did not disclose the amount.
Josiah Wolcott, president of Odyssey’s board of directors, is not troubled by the auditors’ findings. He says that the staff in the school’s business office is working on finding the paperwork needed to support the spending and will provide CSAC with the information. He said he could not provide a timeline but expressed confidence that the matter would be resolved well before the June 30 deadline.
“It’s not surprising that some of the expenses were not accounted for,” Wolcott said, noting that the audit covered a three-year period for a school that has an annual budget in excess of $25 million and whose enrollments have grown rapidly as high school grades were added but “the staff in the business office has not grown commensurately.”
However, Chuck Longfellow, the Department of Education administrator who serves as CSAC chair, is not pleased with the way the audit turned out. He was looking for more than a list of undocumented payments. “We were expecting some kind of interpretation of whether [Odyssey] did something wrong or if they did everything right. We got a neutral report when we were expecting something of a different nature.”
In a statement issued after the audit was completed in mid-December, McGuiness said, “the intent [of the audit] was not to determine the appropriateness of expenditures, but rather to reconcile expenditures for fiscal compliance. Due to the nature of the agreed-upon procedure, the Auditor’s Office cannot provide opinion on its outcome.”
Since then, Longfellow says the Department of Education has “pushed back” at McGuiness and her office, telling them that “we didn’t get what we expected to get.”
“I’m not an auditor,” he said Tuesday. “If we didn’t ask for the right things, she should have guided us.”
The Department of Education “raised very specific questions” about the types of expenses they wanted the auditors to review, and Santora addressed those areas, point by point, in its report, McGuiness said. “In my view, Santora did what they were instructed to do. The audit is complete.”
What happens next is not clear.
"In my view, Santora did what they were instructed to do. The audit is complete." - State Auditor Kathy McGuiness.
Not having a professional opinion on the propriety of Odyssey’s spending, Longfellow says, means “we don’t know whether we have something to worry about or not worry about…. We rely on people [in the auditing business] to help us determine these things.”
McGuiness says she is willing to work with the Department of Education “if they would like to enter into a different type of engagement,” that is, setting different criteria and specifying different types of outcomes for an audit. However, repeating assertions she made on several occasions last year, McGuiness says her office does not have funds available to hire additional outside auditors nor does she have sufficient staff to do a more detailed investigation for the department.
Longfellow said he would continue discussing these issues with McGuiness.
Depending on when Odyssey supplies documents to support its spending, and what those documents contain, it’s possible that Longfellow could convene additional CSAC meetings to determine whether Odyssey is in compliance with the probation terms.
Odyssey does have until June 30 to satisfy those terms. If those conditions are not met, the state has the authority to extend the probation or revoke the newly granted charter renewal.
Among the conditions of the probation was that Odyssey recover the $93,000 in misspent funds – more than $91,000 to set up a corporation that would have run an early learning center affiliated with the school and about $1,600 for two school officials to attend a Greek-themed organization’s conference in Atlantic City, New Jersey. (The audit did verify the conference expenses but also identified another $2,091 in undocumented expenses related to the early learning center.)
Other than the unresolved matters related to the audit, neither Odyssey nor the Department of Education are anticipating that the school will have any significant problems complying with the other terms of its probation.
The school has amended its bylaws and is in the process of reorganizing its board of directors so that a majority of its members are not associated with AHEPA, the Greek fraternal association whose leaders founded the school, and AHEPA-affiliated organizations. It has also set up and begun to implement procedures to improve transparency by giving its Citizens Budget Oversight Committee greater access to the school’s financial information.
The probation letter also sets a March 1 deadline for developing a plan to improve trust and communications between the board and the school community, including staff and families. That plan is still being developed, Wolcott said. It is likely to include “town hall meetings,” some of which have already been held, as well as a newsletter and scheduling regular “office hours” at the school when a board member would be available to discuss areas of concern with members of the school community.
Odyssey was one of five charter schools to receive five-year renewals from Bunting at the December 19 meeting of the State Board of Education. The renewals, which run from July 1, 2020 through June 30, 2025, were granted to Eastside Charter School, Charter School of New Castle, Gateway Lab School and Las Americas Aspira Academy.